CORPORATE RESTRUCTURING

OF THE INDIAN RAILWAYS

PRESENTED BY:
Manisha Nandwani (6)
Silky Sinha (14)
Rashmi Sharma (20)
Sanjeev Raina (76)
Ravi Kishore (124)
Reetika Joshi (128)
 Article Brief
 Considered world’s largest commercial
enterprise in terms of the number of employees
 Government of India undertaking
 World’s second largest rail network under a
single management
 Evolved into a vertically integrated
organization
 Some of the problems faced by the Indian
Railways:
 Cross-subsidization of passenger and freight
tariff
 High energy and fuel costs
 High accident rate
 Antiquated equipment
 Ageing infrastructure
 Emerging competition
 A restructuring of the Indian Railways was
first proposed in 2001
 Emphasis was on making it a focused
organization
 Installation of computerized Freight
Operations Information System
 Privatization of non-core services
 Adoption of modern business methods to
improve operational efficiency
 Vertical Integration
 Vertical integration is the degree to which a
firm owns its upstream suppliers and its
downstream buyers
 one firm engaged in different parts of
production
Steps taken to reduce vertical integration
 Corporatization of many of its activities and hiving off.
 Separate companies to perform functions performed
in-house earlier .for example Indian Railways catering
and tourism corporation took over the non-core
activities of catering.
 RailTel corporation was formed to create the optic fiber
network for communications.
 Privatization of non-core services and adoption of
modern business methods of marketing and human
resource management to improve operational
efficiency.
 Our suggestions
 Matching customer requirements

 Clarifying its purpose

 Adopt a contemporary business structure

 SWOT ANALYSIS
STRENGTHS

 The ‘Biggest Company’ in the world in terms of

employee strength

 Palace on Wheels’ is a major part of income

 luxurious and affordable to common man

 Technological advancement
 WEAKNESSES

• Corruption within the department.

• Lack of accident proof magnetic wheels in all trains.

• Lack of safety

• Poor infrastructure

• Non pro-active employees

 OPPORTUNITIES

 METRO’S in a commercial city like Mumbai

 Development in small cities

 Profit through privatization

 THREATS

 Low cost airlines

 Improvement of other infrastructure like

roadways

 Could be taken over by Roads

 Measures for corporate restructuring

1. Operational:

 Shedding non core activities

 Focusing on passenger and freight
transportation
 Enhancing customer responsiveness
 Reducing operating expenses
 Improving asset utilization
2. Financial:

 Improved freight and passenger earnings

 Gross traffic revenue
 Higher cash surplus
 Higher net revenue
3. Managerial:

 Corporatization of non core activities

 Adoption of new methods in marketing and
human resource functions
 Our suggestions
 recover the waning confidence of its foreign
investors and propel foreign capital back into
the country
  Disinvestment allows the government to sell
shares to private ownership while still
retaining managerial direction of the company.
Basic elements of corporate restructuring
 Prioritization
 Quick implementation
 Coordinated investments
 Scrap the incremental plan heads based
approach to allotments
 Conclusion
The Indian Railways should go for disinvestment
if not privatization and should focus on its core
functions. Also, its imperative to gain the trust of
people so that railways is considered as a reliable
mode of travel.